At the Second Quebec Conference on September 16, 1944, U.S. President Roosevelt and Morgenthau persuaded the initially very reluctant British Prime Minister Winston Churchill to agree to the plan, likely using a $6 billion Lend Lease agreement to do so.[1] Churchill chose however to narrow the scope of Morgenthau's proposal by drafting a new version of the memorandum, which ended up being the version signed by the two statesmen.[1]

The gist of the signed memorandum was "This programme for eliminating the war-making industries in the Ruhr and in the Saar is looking forward to converting Germany into a country primarily agricultural and pastoral in its character."

News of the existence of the plan was leaked to the press [2]. President Roosevelt's response to press inquiries was to deny the press reports.[3].

In wartime Germany, Goebbels was able to use the plan to bolster the German resistance on the Western front.

In occupied Germany, the Morgenthau plan lived on in the U.S. occupation directive JCS 1067 and in the Allied "industrial disarmament" plans, designed to reduce German economic might and to destroy Germany's capability to wage war by complete or partial de-industrialisation and restrictions imposed on utilization of remaining production capacity. By 1950, after the virtual completion of the by then much watered-out "level of industry" plans, equipment had been removed from 706 manufacturing plants in the west and steel production capacity had been reduced by 6,700,000 tons.[2]

In early 1946 U.S. President Harry S. Truman finally bowed to pressure from Senators, Congress and public to allow foreign relief organizations to enter Germany in order to review the food situation. In mid-1946 non-German relief organizations were finally permitted to help starving German children.[3]

In July 1947 with the advent of the initial planning for the Marshall plan designed to help the now deteriorating European economy recover, the restrictions placed on yearly German Steel production were lessened. Permitted Steel production quotas were raised from 25% of pre-war capacity to 50% of pre-war capacity.[5] The U.S. occupation directive JCS 1067, whose economic section had prohibited "steps looking toward the economic rehabilitation of Germany [or] designed to maintain or strengthen the German economy", was then also replaced by the new U.S. occupation directive JCS 1779 which instead stressed that "An orderly, prosperous Europe requires the economic contributions of a stable and productive Germany."

In early 1947 four million German soldiers were still being used as forced labor in the UK, France, and the Soviet Union.[6][7]

Contents

The original memorandum, written sometime between January and early September 1944, signed by Morgenthau, and headed "Suggested Post-Surrender Program for Germany" is preserved at the Franklin D. Roosevelt Presidential Library and Museum. The text, and a facsimile image, can be viewed online.[10]

The main provisions can be summarized as follows:

1. Demilitarization of Germany.

It should be the aim of the Allied Forces to accomplish the complete demilitarization of Germany in the shortest possible period of time after surrender. This means completely disarming the German Army and people (including the removal or destruction of all war material), the total destruction of the whole German armament industry, and the removal or destruction of other key industries which are basic to military strength.

2. Partitioning of Germany.

(a) Poland should get that part of East Prussia which doesn't go to the USSR and the southern portion of Silesia as indicated on the attached map, (Appendix A).

(b) France should get the Saar and the adjacent territories bounded by the Rhine and the Moselle rivers.

(c) As indicated in part 3 an International zone should be created containing the Ruhr and the surrounding industrial areas.

(d) The remaining portion of Germany should be divided into two autonomous, independent states, (1) a South German state comprising Bavaria, Württemberg, Baden and some smaller areas and (2) a North German state comprising a large part of the old state of Prussia, Saxony, Thuringia and several smaller states.

There shall be a custom union between the new South German state and Austria, which will be restored to her pre-1938 political borders.

3. The Ruhr Area.

(The Ruhr, surrounding industrial areas, as shown on the attached map, including the Rhineland, the Kiel Canal, and all German territory north of the Kiel Canal.)

Here lies the heart of German industrial power, the cauldron of wars. This area should not only be stripped of all presently existing industries but so weakened and controlled that it can not in the foreseeable future become an industrial area. The following steps will accomplish this:

(a) Within a short period, if possible not longer than 6 months after the cessation of hostilities, all industrial plants and equipment not destroyed by military action shall either be completely dismantled and removed from the area or completely destroyed. All equipment shall be removed from the mines and the mines shall be thoroughly wrecked.

It is anticipated that the stripping of this area would be accomplished in three stages:

(i) The military forces immediately upon entry into the area shall destroy all plants and equipment which cannot be removed.

(ii) Removal of plants and equipment by members of the United Nations as restitution and reparation (Paragraph 4).

(iii) All plants and equipment not removed within a stated period of time, say 6 months, will be completely destroyed or reduced to scrap and allocated to the United Nations.

(b) All people within the area should be made to understand that this area will not again be allowed to become an industrial area. Accordingly, all people and their families within the area having special skills or technical training should be encouraged to migrate permanently from the area and should be as widely dispersed as possible.

(c) The area should be made an international zone to be governed by an international security organization to be established by the United Nations. In governing the area the international organization should be guided by policies designed to further the above stated objectives.

4. Restitution and Reparation.

Reparations, in the form of recurrent payments and deliveries, should not be demanded. Restitution and reparation shall be effected by the transfer of existing German resources and territories, e.g.

(a) by restitution of property looted by the Germans in territories occupied by them;

(b) by transfer of German territory and German private rights in industrial property situated in such territory to invaded countries and the international organization under the program of partition;

(c) by the removal and distribution among devastated countries of industrial plants and equipment situated within the International Zone and the North and South German states delimited in the section on partition;

The negative public reaction to the publishing of the Morgenthau plan had forced President Roosevelt to publicly shelve it, but he permitted no further planning for the occupation of Germany. Thus with the death of the president the plan itself never took effect, but as its ideas permeated parts of the American administration, especially Morgenthau's Treasury, it did influence subsequent American and Allied planning, most notably:

JCS 1067 explicitly prohibited U.S. occupation authorities from providing any economic or reconstruction assistance of any kind to the German people, not even to maintain the current economic levels. U.S. occupation efforts were to be focused on denazification and the destruction of heavy industry war-production capability.

In January 1946 the Allied Control Council set the foundation of the future German economy by putting a cap on German steel production, the maximum allowed was set at about 25% of the prewar production level.[12] Steel plants thus made redundant were dismantled.

Also as a consequence of the Potsdam conference, the occupation forces of all nations were obliged to ensure that German standards of living were lowered to the level of its European neighbors with which it had been at war with, France in particular.

Germany was to be reduced to the standard of life it had known at the height of the Great depression (1932).[13]

The first "level of industry" plan, signed in 1946, stated that German heavy industry was to be lowered to 50% of its 1938 levels by the destruction of 1,500 manufacturing plants[14]

The problems brought on by the execution of these types of policies were eventually apparent to most U.S. officials in Germany. Germany had long been the industrial giant of Europe, and its poverty held back the general European recovery. The continued scarcity in Germany also led to considerable expenses for the occupying powers, which were obligated to try and make up the most important shortfalls through the GARIOA program (Government and Relief in Occupied Areas).

In view of the continued poverty and famine in Europe, and with the onset of the Cold War which made it important not to lose all of Germany to the communists, it was apparent by 1947 that a change of policy was required.

The Western powers worst fear by now was that the poverty and hunger would drive the Germans to Communism.
General Lucius Clay stated "There is no choice between being a communist on 1,500 calories a day and a believer in democracy on a thousand."

After lobbying by the Joint Chiefs of Staff, and Generals Clay and Marshall, the Truman administration finally realized that economic recovery in Europe could not go forward without the reconstruction of the German industrial base on which it had previously been dependent.[15]
In July 1947, President Harry S. Truman rescinded on "national security grounds"[16] the punitive JCS 1067, which had directed the U.S. forces of occupation in Germany to "take no steps looking toward the economic rehabilitation of Germany." It was replaced by JCS 1779, which instead stressed that "[a]n orderly, prosperous Europe requires the economic contributions of a stable and productive Germany."[17]

The Marshall Plan … is not a philanthropic enterprise … It is based on our views of the requirements of American security … This is the only peaceful avenue now open to us which may answer the communist challenge to our way of life and our national security." (Allen W. Dulles, The Marshall Plan) [18]

Secretary of the Treasury Henry J. Morgenthau Jr. convinced Roosevelt to write to Secretary of State Cordell Hull and Secretary of War Henry L. Stimson saying that a U.S. occupation policy which anticipated that "Germany is to be restored just as much as the Netherlands or Belgium" was excessively lenient. A better policy would have the Germans "fed three times a day with soup from Army soup kitchens" so "they will remember that experience the rest of their lives." [19] Morgenthau was the only Cabinet member invited to participate in the Quebec Conference during which the Plan was agreed to.

The fact Morgenthau's attitude towards the Germans aligned so closely with Stalin's may have been influenced by his close friend and advisor, Harry Dexter White, who was indicted by the Senate Internal Security Subcommittee on a charge of passing U.S. Government secrets to Moscow in 1948 but who died of a heart attack shortly after testifying before the House [20]

Roosevelt's motivations for agreeing to Morgenthau's proposal may be attributed to his desire to be on good terms with Stalin and to a personal conviction that Germany must be treated harshly. In an August 26, 1944 letter to Queen Wilhelmina of the Netherlands, Roosevelt wrote that "There are two schools of thought, those who would be altruistic in regard to the Germans, hoping by loving kindness to make them Christians again — and those who would adopt a much 'tougher' attitude. Most decidedly I belong to the latter school, for though I am not bloodthirsty, I want the Germans to know that this time at least they have definitely lost the war." [21] Roosevelt is also quoted as saying to Morgenthau that "We have got to be tough with the Germany and I mean the German people not just the Nazis. We either have to castrate the German people or you have got to treat them in such a manner so they can't just go on reproducing people who want to continue the way they have in the past" [22] At the Tehran Conference in late 1943, Stalin had proposed that at least 50,000 and perhaps 100,000 German officers should be executed. Roosevelt's son, Elliot, enthusiastically agreed. The President remarked that perhaps 49,000 should be enough [23] When Churchill became enraged at these comments, Stalin quickly assured him that they were joking [24] Roosevelt was presumably joking, but at the Yalta Conference the President said that he was feeling "very much more bloodthirsty towards Germany" than earlier and indicated that he hoped Stalin would again "propose a toast to the execution of 50,000 officers of the German army" [25]

The Morgenthau plan faced strong opposition within Roosevelt's government. Henry L. Stimson, Secretary of War, said he had "yet to meet a man who was not horrified at the 'Carthaginian'-attitude of the Treasury. It is Semitism gone wild for vengeance and will lay the seeds of another war in the next generation." He further pointed out that the plan violated the Atlantic Charter, which promised equal opportunity for the pursuit of happiness to both victors. In a note to the president dated September 5, 1944, Stimson wrote:

We contemplate the transfer from Germany of ownership of East Prussia, Upper Silesia, Alsace and Lorraine (each of them except the first containing raw materials of importance) together with the imposition of general economic controls. We also are considering the wisdom of a possible partition of Germany into north and south sections, as well as the creation of an internationalized State in the Ruhr. With such precautions, or indeed with only some of them, it certainly should not be necessary for us to obliterate all industrial productivity in the Ruhr area, in order to preclude its future misuse.

Nor can I agree that it should be one of our purposes to hold the German population "to a subsistence level" if this means the edge of poverty.

Secretary of State Hull was outraged by Morgenthau's "inconceivable intrusion" into foreign policy. Hull told Roosevelt that the plan would inspire last ditch resistance and cost thousands of American lives. Hull was so upset over the plan that it prompted his resignation from the administration.[26]

Churchill was not inclined to support the proposal, saying "England would be chained to a dead body." Roosevelt reminded Churchill of Stalin's comments at the Tehran Conference, and asked "Are you going to let Germany produce modern metal furniture? The manufacture of metal furniture can be quickly turned in the manufacture of armament." [27] The meeting broke up on Churchill's disagreement but Roosevelt suggested that Morgenthau and White continue to discuss with Lord Cherwell, Churchill's personal assistant.

Lord Cherwell has been described as having "an almost pathological hatred for Nazi Germany, and an almost medieval desire for revenge was a part of his character".[28] Morgenthau is quoted as saying to his staff that "I can't overemphasize how helpful Lord Cherwell was because he could advise how to handle Churchill" (Blum, p. 373). In any case, Cherwell was able to persuade Churchill to change his mind. Churchill later said that "At first I was violently opposed to the idea. But the President and Mr. Morgenthau — from whom we had much to ask — were so insistent that in the end we agreed to consider it".[29]

Some have read into the clause "from whom we had much to ask" that Churchill was bought off, and note a September 15 memo from Roosevelt to Hull stating that "Morgenthau has presented at Quebec, in conjunction with his plan for Germany, a proposal of credits to Britain totalling six and half billion dollars." Hull's comment on this was that "this might suggest to some the quid pro quo with which the Secretary of the Treasury was able to get Mr. Churchill's adherence to his cataclysmic plan for Germany".[30]

Harry Dexter White, regarded by many as the principal author of the plan, was after his death exposed as a Soviet agent. This has prompted some, including John Dietrich in The Morgenthau Plan: Soviet Influence on American Postwar Policy, to draw the conclusion that the real purpose of the plan was to further communist expansion in Central and Western Europe after the war.

At Quebec White made sure that Lord Cherwell understood that economic aid to Britain was dependent on British approval of the plan. During the signing of the plan, which coincided with the signing of a loan agreement, President Roosevelt proposed that they sign the plan first. This prompted Churchill to exclaim: "What do you want me to do? Get on my hind legs and beg like Fala?" ([31])

Anthony Eden expressed his strong opposition to the plan and, with the support of some others, was able to get the Morgenthau Plan set aside in Britain. In the U.S., Hull argued that nothing would be left to Germany but land and only 60% of the Germans could live off the land, meaning 40% of the population would die. Stimson expressed his opposition even more forcefully to Roosevelt. According to Stimson, the President grinned and "looked naughty," before finally saying that he just wanted to help Britain get a share of the Ruhr and denied that he intended to deindustrialize Germany. Stimson replied, "Mr. President, I don't like you to dissemble to me" and read back to Roosevelt what he had signed. Struck by this, Roosevelt said he had "no idea how he could have initialed this" (Elting E. Morrison quoting Stimson's October 31944 diary, "Turmoil and Tradition: A Study of the Life and Times of Henry L. Stimson" (Boston, 1960) p. 609).

The Washington Post urged; stop helping Dr. Goebbels, if the Germans suspect that nothing but complete destruction lies ahead, then they will fight on.[33] The Republican presidential candidate Thomas Dewey complained in his campaign that the Germans had been terrified by the plan into fanatical resistance, "Now they are fighting with the frenzy of despair."[34]

General George Marshall complained to Morgenthau that German resistance had strengthened.[35] Hoping to get Morgenthau to relent on his plan for Germany, President Roosevelt's son-in-law Lt. Colonel John Boettiger who worked in the War Department explained to Morgenthau how the American troops that had had to fight for five weeks against fierce German resistance to capture the city of Aachen had complained to him that the Morgenthau Plan was "worth thirty divisions to the Germans." Morgenthau refused to relent.[36]

On December 11, OSS operative William Donovan sent Roosevelt a telegraph message from Bern, warning him of the consequences that the knowledge of the Morgenthau plan had had on German resistance; by showing them that the enemy planned the enslavement of Germany it had welded together ordinary Germans and the regime; the Germans continue to fight because they are convinced that defeat will bring nothing but oppression and exploitation.[37] The message was a translation of a recent article in the Neue Zürcher Zeitung.

So far, the Allies have not offered the opposition any serious encouragement. On the contrary, they have again and again welded together the people and the Nazis by statements published, either out of indifference or with a purpose. To take a recent example, the Morgenthau plan gave Dr. Goebbels the best possible chance. He was able to prove to his countrymen, in black and white, that the enemy planned the enslavement of Germany.

The conviction that Germany had nothing to expect from defeat but oppression and exploitation still prevails, and that accounts for the fact that the Germans continue to fight. It is not a question of a regime, but of the homeland itself, and to save that, every German is bound to obey the call, whether he be Nazi or member of the opposition. [5]

In July 1947 JCS 1067, which had directed the U.S. forces of occupation in Germany to "…take no steps looking toward the economic rehabilitation of Germany [or] designed to maintain or strengthen the German economy", was replaced by JCS 1779 which instead stated that "An orderly, prosperous Europe requires the economic contributions of a stable and productive Germany." [5]

It took over two months for General Clay to overcome continued resistance to the new directive JCS 1779, but in July 10, 1947, it was finally approved at a meeting of the SWNCC. The final version of the document "was purged of the most important elements of the Morgenthau plan."[38]

Morgenthau had been able to wield considerable influence over Joint Chiefs of Staff Directive 1067. JCS 1067 was a basis for US Occupation policy until July 1947, and like the Morgenthau Plan, was intended to reduce German living standards. The production of oil, rubber, merchant ships, and aircraft were prohibited. Occupation forces were not to assist with economic development apart from the agricultural sector.

Lewis Douglas, chief adviser to General Lucius Clay, US High Commissioner, denounced the directive saying, "This thing was assembled by economic idiots. It makes no sense to forbid the most skilled workers in Europe from producing as much as they can in a continent that is desperately short of everything".[39]

In his 1950 book Decision in Germany, Clay wrote, "It seemed obvious to us even then that Germany would starve unless it could produce for export and that immediate steps would have to be taken to revive industrial production".[40] Douglas went to Washington in the hopes of having the directive revised but was unable to do so.

On March 20, 1945 President Roosevelt was warned that the JCS 1067 was not workable: it would let the Germans "stew in their own juice". Roosevelt's response was "Let them have soup kitchens! Let their economy sink!" Asked if he wanted the German people to starve, he replied, "Why not?"[41]

On May 10, 1945 Truman signed the JCS 1067. Morgenthau told his staff that it was a big day for the Treasury, and that he hoped that "someone doesn't recognize it as the Morgenthau Plan."[42]

In occupied Germany Morgenthau left a direct legacy through what in OMGUS commonly were called "Morgenthau boys". These were US Treasury officials whom Eisenhower has "loaned" in to the Army of occupation. These people ensured that the JCS 1067 was interpreted as strictly as possible. They were most active in the first crucial months of the occupation, but continued their activities for almost two years following the resignation of Morgenthau in mid 1945 and some time later also of their leader Colonel Bernard Bernstein, who was "the repository of the Morgenthau spirit in the army of occupation".[43]

The US Senate's Judiciary Committee asserted: "During the first two years of the Allied occupation the Treasury program of industrial dismantlement was vigorously pursued by American officials."[44]

Vladimir Petrov, an expert on the financial aspects of the occupation, wrote: "By forbidding the American Army to maintain price, wage, and market controls, it (JCS 1067) literally decreed, as a State Department official put it, economic chaos."[45]

In 1947 the U.S. Congress warned that the continuation of the present policies

…can only mean one of two things, (a) That a considerable part of the German population must be "liquidated" through diseases, malnutrition, and slow starvation for a period of years to come, with the resultant dangers to the rest of Europe from pestilence and the spread of plagues that know no boundaries; or (b) the continuation both of large occupying forces to hold down "unrest" and the affording of relief mainly drawn from the United States to prevent actual starvation.[46]

Conditions in Germany reached their lowest point in 1947. Living conditions were considered worse in 1947 than in 1945 or 1946. At an average ration of 1040 calories a day, malnutrition was at its worst stage in post-war Germany. Herbert Hoover asserted that that ration was hardly more than the ration that caused thousands in the Nazi concentration camps to die from starvation.[47] (See also Eisenhower and German POWs#American food policy in Germany shortly after the war)

Vladimir Petrov concluded: "The victorious Allies … delayed by several years the economic reconstruction of the war torn continent, a reconstruction which subsequently cost the US billions of dollars."[48]

In view of increased concerns by General Lucius D. Clay and the Joint Chief of Staff over communist influence in Germany, as well as of the failure of the rest of the European economy to recover without the German industrial base on which it was dependent, in the summer of 1947 Secretary of State General George Marshall, citing "national security grounds" was finally able to convince President Harry S. Truman to remove JCS 1067, and replace it with JCS 1779.[49] JCS 1067 had then been in effect for over two years.

The Morgenthau boys resigned en masse when the JCS 1779 was approved, but before they went the Morgenthau followers in the decartelization division of OMGUS accomplished one last task in the spring of 1947, the destruction of the old German banking system.[50] By breaking the relationships between German banks they cut off the flow of credit between them, limiting them to short-term financing only, thus preventing the rehabilitation of German industry and with immediate adverse effects on the economy in the U.S. occupation zone.[50]

With the change of occupation policy, most significantly thanks to the currency reform of 1948, Germany eventually made an impressive recovery, later known as the Wirtschaftswunder ("economic miracle").

Some of the Morgenthau Plan was implemented, and some came very close to being implemented. The Morgenthau Plan spawned the JCS-1067 [6], which contained the ideas of making Germany a "Pastoral State". This concept's name was later changed to become "level of industry", where Germany's production was to be severely limited but not completely eliminated. No new locomotives were to be built until 1949, most industries were to have their production halved. Automobile production was to be set at 10% of its [pre-war] 1936 level, etc.[7]

Some progress has been made in converting Germany to an agricultural and light industry economy, said Brigadier General William H. Draper, Jr., chief of the American Economics Division, who emphasized that there was general agreement on that plan.

He explained that Germany’s future industrial and economic pattern was being drawn for a population of 66,500,000. On that basis, he said, the nation will need large imports of food and raw materials to maintain a minimum standard of living.

General agreement, he continued, had been reached on the types of German exports — coal, coke, electrical equipment, leather goods, beer, wines, spirits, toys, musical instruments, textiles and apparel — to take the place of the heavy industrial products which formed most of Germany's pre-war exports.[51]

Morgenthau had written a book outlining the full Morgenthau Plan, Germany is Our Problem.
In November 1945 General Eisenhower, Military Governor of the U.S. Occupation Zone, approved the distribution of one thousand free copies of the book to American military officials in Germany.[52]

All armaments plants, including some that could have been converted to civilian operation, were dismantled or destroyed. A large proportion of operational civilian plants were dismantled and transported to the victorious nations, mainly France and Russia.

In addition to the above courses of action, there have been general policies of destruction or limitation of possible peaceful productivity under the headings of "pastoral state" and "war potential." The original of these policies apparently expressed on September 15, 1944, at Quebec, aimed at:

"converting Germany into a country principally agricultural and pastoral,"

and included,

"the industries of the Ruhr and the Saar would therefore be put out of action, closed down…." [53]

As late as March 1947 there were still active plans to let France annex the Ruhr just as eastern Prussia and Silesia had been annexed by Russia and Poland, or at a minimum remove it from Germany.

"The Ruhr — The Times' article and editorial on the breach in the US ranks on the subject of the Ruhr were accurate, and the latter excellent. I have been disturbed over the arena in which the debate has been carried out. Clay and Draper claim that Germany will go communist shortly after any proposal to infringe on its sovereignty over the Ruhr is carried out;".
[54]

The Saar, another important source of coal and industry for Germany, was likewise to be lost by the Germans. It was cut out from Germany and its resources put under French control. In 1955, the French, under pressure from West Germany and her newfound allies, held a plebiscite in the Saar Protectorate on the question of reunification or independence. Reunification won overwhelmingly, and on January 1, 1957, Saarland rejoined West Germany.

As Germany was allowed neither airplane production nor any shipbuilding capacity to supply a merchant navy, all facilities of this type were destroyed over a period of several years. A typical example of this activity by the allies was the Blohm & Voss shipyard in Hamburg, where explosive demolition was still taking place as late as 1949. Everything that could not be dismantled was blown up or otherwise destroyed. A small-scale attempt to revive the company in 1948 ended with the owners and a number of employees being thrown in jail by the British.
It was not until 1953 that the situation gradually started to improve for the Blohm & Voss, thanks in part to repeated pleas by German Chancellor Konrad Adenauer to the Allied High Commissioners.[55]

Timber exports from the U.S. occupation zone were particularly heavy. Sources in the U.S. government stated that the purpose of this was the "ultimate destruction of the war potential of German forests." As a consequence of the practiced clear-felling extensive deforestation resulted which could "be replaced only by long forestry development over perhaps a century.".[56]

Reports such as this by former U.S. President Herbert Hoover, dated March 1947, also argued for a change of policy, among other things through speaking frankly of the expected consequences.

There are several illusions in all this "war potential" attitude.

a. There is the illusion that the New Germany left after the annexations can be reduced to a "pastoral state". It cannot be done unless we exterminate or move 25,000,000 people out of it. This would approximately reduce Germany to the density of the population of France.[57]

In July 1947, President Harry S. Truman rescinded on "national security grounds"[16] JCS 1067, which had directed the U.S. forces of occupation in Germany to "take no steps looking toward the economic rehabilitation of Germany." [17]

In addition to the physical barriers that had to be overcome for the German economic recovery there were also intellectual challenges. The Allies confiscated intellectual property of great value, all German patents, both in Germany and abroad, and used them to strengthen their own industrial competitiveness by licensing them to Allied companies.[58] Beginning immediately after the German surrender and continuing for the next two years the U.S. pursued a vigorous program to harvest all technological and scientific know-how as well as all patents in Germany. John Gimbel comes to the conclusion, in his book "Science Technology and Reparations: Exploitation and Plunder in Postwar Germany", that the "intellectual reparations" taken by the U.S. and the UK amounted to close to $10 billion.[59][60][61] During the more than two years that this policy was in place, no industrial research in Germany could take place, as any results would have been automatically available to overseas competitors who were encouraged by the occupation authorities to access all records and facilities.
Meanwhile thousands of the best German researchers were being put to work in the Soviet Union and in the U.S. (see Operation Paperclip)

Contrary to popular belief, the Marshall Plan, which was extended to also include Western Germany after it was realized that the suppression of the Western German economy was holding back the recovery of the rest of Europe,[62] was not the main force behind the Wirtschaftswunder.[63][64] Had that been the case, other countries such as Great Britain and France (which both received higher economic assistance from the Marshal plan than Germany) should have experienced the same phenomenon. In fact, the amount of monetary aid (which was in the form of loans) received by Germany through the Marshall Plan (about $1.4 billion in total) was far overshadowed by the amount the Germans had to pay back as war reparations and by the charges the Allies made on the Germans for the ongoing cost of occupation (about $2.4 billion per year).[63] In 1953 it was decided that Germany was to repay $1.1 billion of the aid it had received. The last repayment was made in June 1971.[64]

↑Fleming, Thomas The New Dealers' War: F.D.R. And The War Within World War II. Basic Books, 2001, pg. 432.

↑(Memorandum by Harry Dexter White for the Secretary of the Treasury, September 251944, Memorandum by the Deputy Directory of the Office of European Affairs for the Secretary of State, September 201944).

↑Nicholas Balabkins, "Germany Under Direct Controls; Economic Aspects Of Industrial Disarmament 1945–1948, Rutgers University Press, 1964. p. 119. The two quotes used by Balabkins are referenced to respectively; U.S. office of Military Government, A Year of Potsdam: The German Economy Since the Surrender (1946), p.70; and U.S. Office of Military Government, The German Forest Resources Survey (1948), p. II. For similar observations see G.W. Harmssen, Reparationen, Sozialproduct, Lebensstandard (Bremen: F. Trujen Verlag, 1948), I, 48.

Michael R. Beschloss, "The Conquerors: Roosevelt, Truman and the Destruction of Hitler's Germany, 1941–1945". Simon & Schuster (2002) ISBN 0-7432-4454-0 (Much detail on the plan until the death of Roosevelt/beginning of the occupation, then less detail)

John Dietrich, "The Morgenthau Plan: Soviet Influence on American Postwar Policy". Algora Publishing (2002) ISBN 1-892941-90-2 (Much detail on the M. plan during the entire occupation)

Vladimir Petrov, "Money and conquest; allied occupation currencies in World War II." Baltimore, Johns Hopkins Press (1967) (Effected economic policy in occupied Germany, including the activities of the so called "Morgenthau boys", and consequences)

Joint Chiefs of Staff Directive 1067 JCS 1067/6 of 28 April1945 (The final version, JCS 1067/8 of 10 May1945, contained an amendment allowing the production of synthetic rubber and oil, aluminum, and magnesium to meet the needs of the occupying forces, where the previous version had ordered the complete destruction of such industries.)

General Lucius D. Clay Deputy to General Eisenhower, 1945; deputy military governor, Germany (U.S.) 1946; commander in chief, U.S. Forces in Europe and military governor, U.S. Zone, Germany, 1947–49; retired 1949.

General William H. Draper Jr. Chief, Economics Division, Control Council for Germany, 1945–46; Military Government Adviser to the Secretary of State, Moscow Conference of Foreign Ministers, 1947; Under Secretary of War, 1947; Under Secretary of the Army, 1947–49;

James W. Riddleberger(Part 1), (Part 2) Chief, Division of Central European Affairs, U.S. Dept. of State, 1944–47; counsellor of embassy, and chief, political section, American Military Government, Berlin, Germany, 1947–50

E. Allan Lightner, Jr. Assistant Chief, 1945–47, and Associate Chief, 1947–48, of the Central European Affairs Division, Department of State